Broker’s call: Greenpanel Ind (Buy)

| Updated on April 12, 2021

ICICI Securities

Target: ₹300

CMP: ₹185.20

We expect Greenpanel Industries (GNPL) to continue to post strong earnings growth in near-to-medium-term, driven by: increasing demand for modular furniture, particularly post Covid; possible import substitution with likely imposition of anti-dumping duty on thin MDF, CVD on all MDF imports into India; and delay in incremental capacity addition by top MDF players.

Despite fresh worries of Covid cases increasing in the country, we believe this could be a potential blessing in disguise for GNPL with the likelihood of people incrementally opting for modular furniture over customised home-made furniture. We also expect margin tailwind to persist led by firm pricing, sustained cost rationalisation, improving market mix and operating leverage.

Considering improving volume visibility, we are increasing our revenue and PAT estimates by 3.3 per cent/2.4 per cent/2.1 per cent and 13.6 per cent/4.3 per cent/5.7 per cent for FY21/FY22/FY23, respectively.

We expect RoCE to improve from 5.6 per cent in FY20 to 24.2 per cent in FY23E. We maintain our BUY rating on the stock with a revised target price of ₹300 (earlier: ₹256). Key risks: Sudden slowdown in OEM demand and aggressive capacity addition by industry in near-to-medium-term.

Published on April 12, 2021

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